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Insight's role in the changing soft drinks marketplace

by Peter Jenkins , 02.01.2013

The soft drinks market has not ignored the global economic slowdown. Manufacturers are facing flattening population growth in developed markets - including Europe - whilst growth is coming from the developing world including newer markets such as Africa, India and China and the other BRIC markets.

Other macro trends include governmental actions such as those recently seen in New York with the limiting of serving sizes of sugar-sweetened beverages, and consumers now starting to demand that manufacturers tread lightly on the planet and conduct business in a socially responsible way.

The result of this has been the major brands attempting to identify ways of planning for a sluggish economy, but simultaneously understanding the past and predicting what will happen in the future.

In anticipation of these trends what we are simultaneously seeing is a revolution in technology and communication. How consumers obtain information, plan, shop and provide feedback to brands in both developed and developing markets is dramatically different compared to just five years ago.

The most savvy brands will realise that this causes both challenges and opportunities to plan integrated marketing communications that connect with consumers in all aspects of their lives. Adapting to and leveraging this change to build today and tomorrow’s brand relationships are an important component to overcoming the societal pressures that follow the industry around.

These consumer relationships look very different than they did just a few years ago. For example, Facebook fan pages provide brand marketers millions of new ‘eyeballs’. These consumers are very engaged with the brands in a two-way conversation, tapping the thoughts of the most active and potentially influential consumers and providing opportunities for co-creation of new brand propositions.

We are also seeing innovation in integrated marketing communication efforts. For example, Coca-Cola leveraged their online rewards site - Coke Zone - as a platform for promoting the Olympics and their brands. They created a ‘Move to the Beat’ campaign featuring musical content celebrating global athletes and their crafts, delivered by artists relevant to the younger generation. The musical content is delivered across their online platforms as well as public platforms such as YouTube. Within the Olympic Pavilion, Coke created the Coca-Cola Beatbox, which allowed visitors to interact with a large structure to re-mix sounds to create a deeper Olympics and brand experience, all wrapped around the ‘Move to the Beat’ campaign.

This is where consumer insights really come into their own for soft drinks brands. It means that we are able to develop innovation platforms and a roll-out plan that helps our clients set strategy many years in advance.

In addition to how they communicate with fans, the market is also diversifying to consumer feedback and needs. New formulations and sugar alternatives are spurring the creation of new mega-brands and line extensions in developed markets. Big brands are able to capitalise on their deep equities and move beyond a reputation of stodginess by creating brand experiences that are more relevant to today’s consumer.

The world is seeing a growing middle class, which has more discretionary income for things like soft drinks that were once considered luxuries. Brands are also seeing opportunity and volume growth in away-from-home channels that widely broaden the available distribution. To better control costs, distribution and marketing efforts, the market is seeing an increase in vertical integration with manufacturers merging with bottling partners.

The key to doing this successfully is to show that you understand the brand purchase journey in a digital and non-digital world - from word of mouth, through advertising exposure, online and offline shopping behaviour, impacts at the point of sale, brand experience and communication back to the brand.

With so many new segments being added to the soft drinks market every day - most notably flavoured water and energy drinks - the key to achieving this value-add is the ability and emphasis on looking at the customer journey in an integrated way. This is particularly important in a market that is seeing so much shift and requires an ongoing diversification of the product portfolio.

This article was originally published here on Research-Live as part of its January 2013 edition of Research Magazine.